The Insurance Alliance of Michigan today announced more than 25 auto insurance companies are planning to enter the Michigan market since reforms to Michigan’s once broken and outdated auto no-fault system took effect last summer.
“An influx of new companies writing auto insurance in Michigan is great news for Michiganders looking to lower their auto insurance premiums,” said Erin McDonough, executive director of IAM. “The more companies we have operating in the state the more competition there will be, which will ultimately lead to lower rates as companies look to attract new customers.”
Michigan has long been viewed as an undesirable place for car insurance companies because of our state’s auto no-fault law which, up until last year, forced to drivers to purchase unlimited, lifetime medical benefits with their auto insurance. The expensive mandate caused premiums to skyrocket to the highest in the country and marked the state as ‘closed for business’ to new companies because of the cost of doing business here.
Reforms to Michigan’s auto no-fault law, which took effect on July 2, 2020, allows drivers to choose from several levels of medical coverage to include with their auto insurance. They can also choose to keep unlimited, lifetime medical benefits or opt-out of medical coverage entirely if a driver is covered by Medicare or separate health insurance.
“Many of these companies entering the Michigan market for the first time are opening offices here and hiring locally,” McDonough said. “This influx of new jobs comes at a time when Michigan’s economy needs a boost to aid in recovering from the COVID-19 pandemic.”
The Detroit Free Press recently reported on the flood of new companies coming into the state and underscored the importance of staying the course on no-fault reform with a medical fee schedule poised to take effect this summer.
"The new reform bill does not actually get its teeth until July 1 of 2021. That is why we won’t step foot — and no one will step foot as a new carrier in Michigan — until July 1 of 2021,” CURE Auto Insurance COO Eric Poe told the Free Press.
Drivers across the state are saving hundreds and even thousands of dollars a year on their auto insurance premiums because of the reforms. The lower rates are based on expected savings from a reasonable medical fee schedule. Changing the fee schedule before it takes effect would undo savings for drivers and cause premiums to go back up.
Last year, Michigan’s insurance industry made the Michigan Department of Technology, Management and Budget’s “Hot 50” list of industries that show positive projected long-term job growth. According to data compiled by the state, Michigan’s insurance industry is expected to add more than 1,300 jobs between now and 2028 with an average salary between $37,000 and $81,000 annually.
According to A Firm Foundation: How Insurance Supports the Economy insurance companies in Michigan employed more than 83,000 people and paid more than $6 billion in wages in 2018.